by Andrew Cates

Andrew Cates is General Counsel and Director of Government Affairs at the Texas Nurses Association. He is the author of “Texas Ethics Laws Annotated” and is an expert on Texas campaign finance and lobby law.

Texas’s 86th Legislative Session is in full swing in Austin, and now that the bill filing deadline has passed we can take stock of the bills which will drive the decisions of the legislative session. The 2019 legislature filed over 7,000 bills, the second-highest number of bills filed in the last 60 years, and around 50 of those bills relate specifically to campaign finance and lobby laws. As such, they could determine how nonprofits operate in Texas’s political system into the future.

Generally, many of the bills included in this post loosen restrictions on how corporations and nonprofits engage in political advocacy through direct campaign expenditures (sometimes referred to as independent expenditures) and through political action committees (PACs). They also impact reporting requirements for organizations and individuals who are required to register as lobbyists in Texas.

A quick note about terminology – when used in the Election Code and therefore in this blog post, the definition of “corporation” includes and applies to all 501(c) nonprofit entities.

SB 366

This bill reduces the detailed reporting threshold for lobbyists (the amount at which a lobbyist must detail all of the individuals present when making a lobby expenditure[1]) down to 30% of the legislative per diem. This change would reduce the reporting threshold down from the current $132.60 to $66.30. It would also extend the detailed reporting requirement to any shared lobby expenditures that are split by lobbyists.

In addition, it would extend reporting requirements for lobbyists to include expenditures made to benefit the immediate family members of legislators and members of the executive branch.

Finally, the bill would require lobbyists to notify a legislator or member of the executive branch when the lobbyist has reached the annual limit for lobby expenditures for that office.

If passed, this bill could greatly affect the work of nonprofits that engage in lobbying activities at the state level in Texas, because it could expose the nonprofit (or individual lobbyist staff members) to additional reporting requirements if they make lobbying expenditures.

HB 776

This bill is a cleanup of a long-standing dispute between the Texas Ethics Commission and stakeholders regarding the stance that the commission has taken that a corporation may only contribute corporate money to its own PAC, and not to any other PAC.

The bill, if passed, would add a new section to the election code to specify that a corporation can give corporate money to PACs outside of its control. If the PAC is directly controlled by the corporation, then nothing changes. But if the PAC is not directly controlled by the corporation, the corporation could only give money to that PAC if the PAC is set up to only make direct campaign expenditures and does not make political contributions to candidates or officeholders.

If this bill passes, it will allow nonprofits[2] and other organizations to not only finance their own PAC with corporate money, but also to send corporate money to Direct Campaign Expenditure (DCE)-Only PACs (Super PACs) in Texas, for use in supporting or opposing candidates without giving direct contributions to them.

SB 773

This bill would amend the election code to allow corporations (including nonprofits) to solicit political contributions for their PAC from their members and their members’ families by agreeing to making charitable contributions that fully or partially match the contributions given to their PAC.

HB 3580

This bill incorporates several other bills — HB 368, HB 774, and HB 776 — and repeals a number of statutes that have been ruled unconstitutional by various courts around the country. In particular, it includes language from:

HB 368– repealing the prohibition on using House/Senate video & audio in political advertising

HB 774– repealing requirement that PACs be set up at least 60 days before an election

HB 776–allowing corporations to contribute to PACs that are not controlled by the corporation so long as the PAC receiving the funds only makes direct campaign expenditures (independent expenditures) and not political contributions to candidates or officeholders.

It is one of the most likely bills to move through the legislature since it broadly incorporates other smaller bills and is filed by the Chairwoman of the Elections Committee, Rep. Stephanie Klick.

HB 2586 /SB 1980

This bill would loosen the rules for groups who engage in direct campaign expenditures. It would allow the organizations to meet with candidates or campaigns without fear that the meeting would be used against them as evidence of collusion with the organization that is supporting that candidate with direct campaign expenditures.

Currently, many nonprofits that engage in political activity shy away from meeting with candidates or their campaigns because they are prohibited from coordinating their direct campaign expenditures with the campaign or candidate. Thus, the safest route has always been to set up a wall between the organization and the candidates. This bill would allow the candidate/campaign to sign an affidavit and declare under penalty of law that no coordination occurred in a meeting between the group and the campaign.

The bill also includes similar language to HB 776 (above). It allows corporations to make campaign contributions to PACs that have filed an affidavit affirming that they will not use corporate money to support candidates or PACs that make contributions to candidates.

Finally, the bill repeals a section of the elections code which currently prohibits PACs created by corporations from making political contributions or expenditures from money collected through dues, fees, or other money that is collected as a condition of employment or membership in the organization.

[1] An expenditure for lobbying purposes means any payment in the following categories which are made specifically to communicate directly with one or more members of the legislative or executive branch to influence legislation or administrative action.

transportation and lodging;

food and beverages;

entertainment;

gifts, other than awards and mementos;

awards and mementos; and

expenditures made for the attendance of members of the legislative or executive branch at political fundraisers or charity events.

[2] The tax code prohibits 501(c)(3)s from supporting or opposing candidates. This restriction will continue to apply to (c)(3)s even if HB 776 passes. As such, HB 776 would only change the rules for nonprofits that are permitted to make independent expenditures and engage in partisan political activity.

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